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‚Eventually take over the book‘ sounds like something that doesn‘t happen in the next 15 years
I’d be careful with this. I’ve seen something similar at a smaller scale (300m AUM). The book was much smaller by the time it was taken over because the advisor had sold portions off to friends along the way
You would probably need to buy the book once they step down. 800m is a decent size but does it consist of 10 UHNW clients or 400 “mass affluent” clients? Is it a family office or a dedicated branch office for a larger firm? Do you have support staff helping you? I don’t think the industry is “dying” but people are questioning the value an advisor provides to a client. And rightfully so. I work in this space and many of my clients are transitioning their advisors away from typical recommendations and making them put their clients in a firm managed plan. FAs are no longer stock pickers. Sitting and waiting for 10 years sounds risky for your career, especially if you will be competing against robo advice in the mass affluent market.
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Very helpful, thank you!
Having family that have been in industry, be careful. I’d expect more regulation in the future and wealth management tech is going to increasingly take the customer base
Right now I’m very skeptical of it as an industry. Most advisors know little, churn investments to make money, and rarely help their clients much. Seeing people make $500k+ /year for 20 hours/week of work isn’t likely going to continue in another 10 years when roboadvisors can do it better, cheaper. That said I do think ultra high net worth clients need advisors for generational wealth transfer strategies etc. that aren’t easy for roboadvisors to do
Also be certain you’ll take over the book and that this is what you want to do. The skill sets of financial advisors is customer service and I’m uncertain what well-paying career paths will want that if you’re in the role for 5+ years
Pro
These are my concerns exactly. Are your family members still in the industry? What has been there experience?
The crazy thing is, the book continues to grow (consistent 10-12 new households / year). I’m almost certain the industry will be wildly disrupted by WM Tech, the question is, how long before that takes place, and to what degree. Knowing this book is big enough that it could take a 50% hit and I’d still be close to $1M in comp makes it feel less risky, but still a risk nonetheless.
I do think it would be rewarding as well. And trying to weigh that being a consulting Partner has risks of its own. We are also being disrupted, just not quite as much.
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I think it sounds terribly boring; will you build any skills? And I can’t imagine how it would be fulfilling; you’re either selling more expensive services to people best suited for some low cost indexes, or helping the already rich avoid taxes.
So boring + soul crushing? I guess if you want an easy paycheck for a time.
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The alternative would be stay with PwC and try to make partner. Currently first year director - no guarantee of partner - but I know what I need to do to make it happen, and relatively confident I could make it happen.
I think wealth management under someone would be cool and much more chill. You can always try to build your own book too.
What I would personally try to do is target a niche sector of clients, like doctors, or lawyer, or people who are too busy to do wealth management themselves. Simultaneously, I would try to get allocation into SPVs for growth equity rounds by becoming a Registered Investment Advisor.
I’d be careful, especially with more boutique shops. Once the “key man” leaves, usually turnover on their book is very dramatic.
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Do you have any case studies around this? This is a large bulge bracket bank, but turnover is still my biggest concern.
I expect that you got that $2M number from your uncle right? If you’re backing into it, you could be drastically high depending on the firm. I left PWM for your very concerns also because I was incredibly bored and the pay was way lower than expected. When you’re an FA, the weight of new business falls 98% on YOU. If the book is growing like that than your uncle must be great at what he does. Don’t expect it to continue unless you’re as good as he is! A 10 year runway for transition is the best case scenario though. Only takes about 2 years to really get to know a client. 300 is a lot though… anything over 125-150 can be tough to keep tabs on.
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I’m with you on that - I do not think I could continue to grow the book at that pace, but could probably maintain for the most part with referrals here and there. New business development would by far the hardest aspect of the job. The $2M number was this year (actually $2.4M). It’s not typical for him (he had a great year due to market performance), but over the past 15 years it’s averaged in the $1.2-$1.8M range. I probably can’t expect that to increase much due to fee compression in the industry, will probably decline a bit. Still seems comparable to partner pay though.
D2, PWM is still selling all the time! Hopefully you’re good enough that most of your sales come from referrals.